1 The Chinese-Brand Electric Vehicles in the Eyes …
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location at present is the possibility of being targeted by the US administration.
For example, US President Trump has criticized the Japanese automobile industry
that automobile trade between Japan and the US is unfair. On January 5, 2017, Mr.
Trump tweeted as the following: “Toyota Motor said it would build a new plant in
Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build a plant in U.S. or pay
big border tax” (Trump 2017). Trump’s tweet caused Japanese automobile makers
positioning Mexico as the export base to the US market to revise their manufacturing
strategies.
If indeed China builds plants of EVs to target the US market, the US is a clear
choice. If the US restricts CBEVs made in China, and if Chinese EVs manufacturers
build plants in the US, China may be receiving lasting benefit. For instance, several
Japanese companies (e.g., Toyota) accelerated plans to build assembly plants in the
US by two to four years as a result of the US protectionism trade policy in the
1980s. Currently, Japanese car manufacturers produce 3.8 million cars in the US.
Chinese EVs manufacturers may receive substantial benefits from the investment
EVs production facilities in the US. In the end, a new competition, not the restriction
of competition, will accelerate the US EVs industry.
1.5.3 Strategic Recommendations for CBEVs
In just a few decades, dramatic changes in the demographic, natural, economic,
social, legal, and political environments, combined with modern advancements in
batteries technology, new energy sources, and AI technology will revolutionize most
competitive environments for the EVs. The competition will become global, rather
than mostly domestic. That is, China, like any other new entrant in the US market,
will face with well-established competition amongst the US and foreign EV manufacturers. To gain market share in the US, China needs to perform activities that
increase the value of products deemed necessary by customers. This is important not
only because of the price aspect but also due to the establishment of “the value [US]
consumers associate with a [Chinese] brand, as reflected in the dimensions of brand
awareness, brand associations, perceived quality, and brand loyalty” (Aaker 1991).
Entering the US market requires strong promotional support because customers are
reluctant to purchase, or even consider, a product with which they are unfamiliar.
Prospects with interest in a new product are not likely to turn into actual buyers until
they experience the comfort of familiarity.
In order to increase US consumers’ familiarity with CBEVs and accelerate their
brand-building efforts, we suggest that CBEVs form strategic alliances with western
companies possessing resources and core competencies such as brands, technologies
and distribution networks. According to the signaling theory, when certain attributes
of a product, a service or a person are not directly observable, one party, the agent,
may credibly convey some information about itself (him or herself) to another party,
the principle (Spence 1973). While the US consumers may have little knowledge
about the CBEVs’ quality, their western alliance partners’ existing reputation serves
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location at present is the possibility of being targeted by the US administration.
For example, US President Trump has criticized the Japanese automobile industry
that automobile trade between Japan and the US is unfair. On January 5, 2017, Mr.
Trump tweeted as the following: “Toyota Motor said it would build a new plant in
Baja, Mexico, to build Corolla cars for U.S. NO WAY! Build a plant in U.S. or pay
big border tax” (Trump 2017). Trump’s tweet caused Japanese automobile makers
positioning Mexico as the export base to the US market to revise their manufacturing
strategies.
If indeed China builds plants of EVs to target the US market, the US is a clear
choice. If the US restricts CBEVs made in China, and if Chinese EVs manufacturers
build plants in the US, China may be receiving lasting benefit. For instance, several
Japanese companies (e.g., Toyota) accelerated plans to build assembly plants in the
US by two to four years as a result of the US protectionism trade policy in the
1980s. Currently, Japanese car manufacturers produce 3.8 million cars in the US.
Chinese EVs manufacturers may receive substantial benefits from the investment
EVs production facilities in the US. In the end, a new competition, not the restriction
of competition, will accelerate the US EVs industry.
1.5.3 Strategic Recommendations for CBEVs
In just a few decades, dramatic changes in the demographic, natural, economic,
social, legal, and political environments, combined with modern advancements in
batteries technology, new energy sources, and AI technology will revolutionize most
competitive environments for the EVs. The competition will become global, rather
than mostly domestic. That is, China, like any other new entrant in the US market,
will face with well-established competition amongst the US and foreign EV manufacturers. To gain market share in the US, China needs to perform activities that
increase the value of products deemed necessary by customers. This is important not
only because of the price aspect but also due to the establishment of “the value [US]
consumers associate with a [Chinese] brand, as reflected in the dimensions of brand
awareness, brand associations, perceived quality, and brand loyalty” (Aaker 1991).
Entering the US market requires strong promotional support because customers are
reluctant to purchase, or even consider, a product with which they are unfamiliar.
Prospects with interest in a new product are not likely to turn into actual buyers until
they experience the comfort of familiarity.
In order to increase US consumers’ familiarity with CBEVs and accelerate their
brand-building efforts, we suggest that CBEVs form strategic alliances with western
companies possessing resources and core competencies such as brands, technologies
and distribution networks. According to the signaling theory, when certain attributes
of a product, a service or a person are not directly observable, one party, the agent,
may credibly convey some information about itself (him or herself) to another party,
the principle (Spence 1973). While the US consumers may have little knowledge
about the CBEVs’ quality, their western alliance partners’ existing reputation serves